Oliver Kazunga, Senior Business Reporter
THE Small to Medium Millers Association of Zimbabwe (SMMAZ) has called for a review of the pricing structure under the grain subsidy programme to enhance the viability of the sector.

The association has made a written submission to the Permanent Secretary in the Ministry of Industry and Commerce, Dr Mavis Sibanda, dated June 6, 2020. In the document, seen by this publication, SMMAZ chairman Mr Davis Muhambi said it was critical to revise the prevailing subsidy grain pricing structure to save the small and medium milling industry from collapse.

“While we understand and support Government’s position not to increase the price per 10kg bag to protect the citizens, we write to bring to your attention certain pricing aspects of the Roller Meal Subsidy Programme.

“The intended new pricing structure, if left unattended will threaten the existence and viability of small and medium millers or will inevitably lead to the exclusion of SME millers from the subsidy programme,” he said.

The association said the new pricing structure proposes that the price of roller meal remains $63 per 10kg ($6 300/tonne) and yet the price of grain has gone up 130,6 percent from $6950 to $16 028/tonne, while the subsidy level, which remains owing to the miller for long periods, also increased by 153 percent from $6 320 to $15 995 per tonne. “While we certainly do appreciate the adjustment of the subsidy level, we hasten to add that the mere thought of delays in accessing it quickly overshadows the benefits,” said Mr Muhambi.

“There are three key actors in the subsidy that require adequate support from the Government in the subsidy programme; the farmer, the millers and the consumer.”

He said recent developments have seen an increase in the producer price of maize, a positive development for the farmers. The decision to keep the price of mealie meal at $63 is also positive for the customer, he said.

“While the farmer and the consumer have been supported by Government, it’s unfortunate that the miller, a key component in this equation, has been given no support at all.

“The pricing structure places insurmountable pressure on the already value eroded working capital of small and medium scale millers in light of late payments of previous balances, some of which are still outstanding to date,” he said.

“In fact, Government seems to have inadvertently placed the burden of funding the farmer, the consumer and the entire subsidy programme on the miller.”

Mr Muhambi said that the immediate working capital outlay or variable costs required for a miller to place roller meal on their sales floor, adds up to a total of $222,95/10kg or $22 295/tonne. After sales, he said, the miller will only get 28,26 percent or $6 300/tonne.

“This implies that at every sale of subsidy roller meal, the miller’s working capital is reduced by 71,74 percent per truckload.

“This is a gap, which evidently no SME miller can sustain in the prevailing inflationary environment, even if they wished to continue participating in the subsidy programme,” said Mr Muhambi, adding that this would make the subsidy programme a preserve of big millers, which somehow creates monopolies.

In light of the above concerns, he said SMMAZ proposes that Government considers giving millers a grain credit of $10 995/tonne through the Grain Marketing Board (GMB).

“This means the miller pays $5 000/tonne for grain, which will enable us to produce and deliver a tonne of mealie meal at the Government proposed price of $6 300/tonne,” said Mr Muhambi.

He said the grain credit will be recovered upon submission of the subsidy invoice to Government. “Treasury will pay that credit directly to GMB. This will provide adequate cushioning for the SME miller to participate in the Roller Meal Subsidy Programme,” said Mr Muhambi. — @okazunga.